Oregon businesses feel Japan’s earthquake

Saturday

A week after a disastrous tsunami hit Japan, Oregon businesspeople are feeling the pull on 10,000 threads of commerce that bind Oregon to the island nation.

Many worry about their business partners in hard-hit areas of Japan while at the same time trying to keep the threads of commerce intact.

Starfire Lumber of Cottage Grove, for example, had to divert a Japan-bound shipment to Seoul, South Korea, when the usual ports were either destroyed or closed.

A purchasing officer at CT Medical in Portland lost his supply of suture needles because the manufacturer is in Tochigi, in northern Japan.

And Oregon Berry Packing Vice President Jeff Malensky, who was in Tokyo meeting with a major customer on the day the earthquake struck, worries that he won’t be able to get his products down impassable roads in interior Japan in June, when his Oregon berries start ripening.

Japan’s major cargo center, Narita International Airport, is north of Tokyo and has yet to resume normal operations because of broken road and train links and power outages, he said.

“Their system can’t work because of transportation issues,” he said. “That’s a big concern for anybody shipping over there. Japan is a huge trading partner for all of us.”

The state opened a trade office in Tokyo 27 years ago; Japan is now Oregon’s third-largest trading partner, behind Canada and China.

A 17-member trade delegation of mayors, state officials and business owners went to Japan in early March to look for opportunities at a world clean energy expo and to present “Invest in Oregon” seminars to 110 Japanese companies in Osaka and Tokyo.

Japan has the globe’s third-largest economy and its 127 million citizens have a worldly palate.

“They’re connoisseurs of the best the world has to offer,” Malensky said. That includes $1.38 billion worth of Oregon products annually, lead by agricultural goods, chemicals, electronics and wood products.

Japan buys Oregon niche products, such as pinot noir from King Estate in Lane County and wood-and-carbon-fiber dragon boat paddles from a manufacturer in Bend.

“Because they’re such a mature market, they can take in a lot more than bulk commodities,” said Bruce Pokarney, spokesman for the state Department of Agriculture. “They take value-added products: processed foods, wine and seafoods. Some of our higher-end stuff does well in Japan.”

In 2010, Japan bought $546 million worth of agricultural goods from Oregon, according to the U.S. Commerce Department. That includes wheat, seafood, onions, frozen vegetables and potatoes, Pokarney said.

Japan imports 3.4 million tons of wheat from the United States each year, and about one-third of that is soft white wheat that grows in the Pacific Northwest, including the Willamette Valley, said Mike Flowers, cereal specialist at the Oregon State University Extension.

Japan is hungry for blueberries, too. It’s the second-biggest export market for the berries, behind Great Britain, Malensky said.

The fruit of another Oregon vine is also popular in Japan. King Estate Winery ships 300 12-bottle cases a year to Japanese restaurants, mainly in Tokyo, Osaka and Kobe, marketing director Sasha Kadey said. King Estate sends its wines to a warehouse in Japan a half-dozen times a year. Kadey expects some short-term disruption, but in the long term, it will all smooth out, he said.

Bill Conerly, a Lake Oswego economist who has analyzed the impact of the earthquake on the U.S. economy, said the agricultural trade should soon return to its regular pattern.

The impact on Oregon electronics exports — $165 million in 2010 to Japan — is much less clear.

Some Oregon-based electronics plants may be short on parts, which were manufactured in northern Japan, said Marc Zolton, a spokesman for Business Oregon, the state’s economic development program. That includes ON Semiconductor, which has a plant in Gresham, he said.

“Some Japanese companies may move production to the United States temporarily, depending on how deep and how long the crisis is in Japan,” Zolton said.

SEH America in Vancouver, Wash., for example, announced that it would boost its production of wafers to cover for its parent company in Japan, whose other plants were damaged.

Oregon’s lumber mills, plywood plants and other wood products companies shipped $133 million in goods to Japan last year. The flow is stalled for now, but there is likely to be a spike in demand as Japan rebuilds, local companies say.

Japan homebuilders use Oregon wood in their characteristic pillar-and-post construction. They will need wood to build concrete pouring forms.

Starfire Lumber General Manager Robbie Robinson and a sales manager were headed for Japan in early March but learned of the earthquake in time to cancel the trip.

About 35 percent of Starfire’s output goes to Japan, Robinson said. Starfire has shipped its wares to the ports of Sendai, the northern port that was destroyed, and Nagoya, a port south of Tokyo, Robinson said.

“We’re holding up any additional shipments (now),” he said. “It probably will take another week before we know.”

But the mill is continuing to cut its Japan-bound orders, and it’s preparing to convert additional capacity for that marketplace, Robinson said.

“They are a very resilient society. They will rebuild and they will do it very rapidly,” he said. “We’ll cut whatever we have to and get it to dock as quick as we can.”

Two mills in northern Japan have been destroyed, according to Random Lengths and the American Plywood Association. As many as five other mills were damaged. “It may be several months before the mills resume consistent production,” said Shawn Church, editor of the Eugene-based Random Lengths trade publication.

Portland lumber brokers are seeking supplies for Japan, Church said, but demand is likely to take some time to emerge. “Obviously, nobody is doing handstands over a tragedy like this, but if Japan needs wood products there’s companies here that can supply their needs,” he said.

The Swanson Group has had enough broker calls this week that the company — with a plywood plant in Springfield and a sawmill in Noti — decided to get a Japanese Agricultural Standards stamp in preparation to begin selling its products in Japan, marketing director Bob Maurer said.

“We do pride ourselves on being flexible,” he said. “You want to be able to take advantage of increased demand, regardless of how it comes to you. We’d much rather see a robust U.S. economy, but if there’s increased demand (from Japan) we want to be able to react and respond.”

Oregon businesses have felt the strain and tug as their counterparts in Japan try to regroup after the earthquake.

But business owners here — many of whom are friends with their partners in hard-hit areas — say they will wait patiently for the return of trade.

“Right now they’re just trying to salvage people and do something with these reactors,” said Robinson, the wood products executive who has visited Sendai. “There’s a concern about thousands and thousands of people without shelter and no water. It’s just an unbelievable mess over there. It’s just overwhelming.”

Never miss a story

Choose the plan that's right for you.
Digital access or digital and print delivery.

Original content available for non-commercial use under a Creative Commons license, except where noted.
The Register-Guard ~ 3500 Chad Drive, Suite 600, Eugene, OR 97408 ~ Privacy Policy ~ Terms Of Service